Investing in Financial History Newsletter

This is a free newsletter that explains current events by relating them to similar events in the past. On average, the newsletter is published once per month but varies based on the nature of current events. A sample of recent issues are provided below.

Rebuilding the Wealth of the American Empire

Investing in Financial History – January 31, 2025
This newsletter discusses three important underlying currents that will likely shape economic and political events in the United States over the next several decades. At the root of these currents is the unsustainable spending of the federal government over the past 65 years. The COVID-19 pandemic accelerated the day of reckoning for Americans, and the next decade or two will likely be defined by the consequences of excess spending.

Inflation Persisted Because the Fed Relented

Investing in Financial History – December 20, 2024
This newsletter explains why inflation reignited in the United States in late 2024 and early 2025. It also explains why the Federal Reserve leadership could have and should have anticipated this outcome when they made an ill-advised pivot toward more accommodative monetary policy in September 2024. The Fed dismissed the lessons of the 1960s and 1970s, and now they will bear the consequences of this unforced error.

Alternative Asset Classes Are Flooded

Investing in Financial History – October 24, 2024
This newsletter summarizes insights from two articles that were published simultaneously by the Museum of American Finance and the CFA Institute's Enterprising Investor. The first article, "A 45-Year Flood: The History of Alternative Asset Classes," recounts the origins of many alternative asset classes and explains why they are currently flooded with capital. The second article, "Wall Street's Latest Flood: Private Credit," explains the history of the newest investment fad, and why signs are that it resides squarely in the flood stage.

The Fed's Pivot Violated the Rule That Matters Most

Investing in Financial History – October 10, 2024
This newsletter argues that the Federal Reserve's pivot toward looser monetary policy in September 2024 was premature and creates substantial risk that inflationary pressures will reignite. Central to the argument are lessons learned during the late 1960s and 1970s when the Federal Reserve made similar mistakes that led to the Great Inflation of 1965-1982.

Three Financial Challenges for the United States in 2024

Investing in Financial History – April 16, 2024
This newsletter is the first in a three-part series. It provides details on several historical events that explain the post-COVID-19 inflation and the Federal Reserve's monetary response. It concludes with an explanation as to why the market continues to underestimate what will likely be required for the Fed to decisively tame inflation and return to its 2% long-term target.

Overdue Credit to America's Financial Founding Father

Investing in Financial History – January 11, 2024
This newsletter summarizes the first chapter of Investing in U.S. Financial History: Understanding the Past to Forecast the Future. It explains how Alexander Hamilton repaired the broken credit of the United States and set the nation on its 234-year path of prosperity. Readers can also download a copy of the full chapter as a sample of the book.

Ten Book Recommendations for Students of Financial History

Investing in Financial History – December 4, 2023
The topic of this newsletter is a bit lighter than usual. I was unable to publish Investing in U.S. Financial History in time for the holidays, but as a consolation, this newsletter recommends ten books that I found to be especially insightful. I hope one or more of these serve as valuable gift ideas. I can personally vouch for their value.

The Siren Song of a Soft Landing is Getting Louder

Investing in Financial History – October 31, 2023
This issue reveals the danger should the Federal Reserve abandon its restrictive monetary policy prematurely. Using the story of the Sirens from the epic poem, The Odyssey, the newsletter also warns that at least one Fed president appears to be listening to the Siren song of a soft landing.

Published Research

The articles and links provided include a selection of recent research papers, speeches, and podcasts that address a variety of topics, such as monetary policy, the debt ceiling debate, principles of central banking, cryptocurrency, and post-COVID-19 inflation.

Investment Insights:

Rediscovering an American Treasure: The True Legacy of Hetty Green

Financial History – February 4, 2025
Throughout her life and for more than 100 years after her death, Hetty Green was derided as the "Witch of Wall Street." But those who take the time to evaluate her life in its entirety realize that she was really a kind-hearted woman, not to mention one the best investors in all of U.S. history. This article sets the record straight on Wall Street's queen.

Wall Street's Latest Flood: Private Credit

CFA Institute's Enterprising Investor – October 24, 2024
This article explains the latest alternative asset class craze to captivate institutional investment plan trustees. Similar to previous crazes, the private credit craze is already showing clear signs of entering the dreaded flood phase.

A 45-Year Flood: The History of Alternative Asset Classes

Financial History – October 24, 2024
This article explains the history of alternative asset classes, such as venture capital, buyout funds, hedge funds, and private credit. The article explains the distinct investment cycle through which alternative asset classes pass and concludes by revealing why nearly all alternative asset classes reside squarely in the flood stage.

Vanguard's Former OCIO Clients Must Stand Their Ground

CFA Institute's Enterprising Investor – July 3, 2024
This article explains the temptations that Mercer's newly acquired OCIO clients may encounter following the recent completed acquisition of Vanguard's OCIO group. The warning stems from a recent interview conducted by Mercer's U.S. CIO regarding Mercer's plans and aspirations for this unit and the firm in general.

The Unexpected Legacy of a Prudent Man

Financial History Magazine – Winter 2024
This article recounts the nearly two hundred year history of the Prudent Investor Rule. It begins with the famous court case of Harvard College v. Amory, and then explains multiple revisions of the rule in the twentieth century. The article concludes by recommending a further revision to the rule to address the growing complexity and costs of institutional portfolios.

The Unspoken Conflict of Interest at the Heart of Investment Consulting

CFA Enterprising Investor – January 25, 2024
After serving as an investment consultant at RVK, Inc for nearly thirteen years and researching the financial history of the United States for nearly four years, it became clear that the non-discretionary investment consulting profession suffers from a structural conflict of interest at the heart of the business model itself. This calls into question the sincerity of the frequent claims of maintaining an unbiased perspective. This article explains the origin of this conflict and why it persists today.

A Whale of Tale: The History of Venture Investing in the United States

Financial History Magazine – Fall 2023
This featured article recounts more than 200 years of venture investing in the United States. It begins in the early 1800s with the perilous whaling voyages departing from New Bedford, and it ends with the overcrowding of institutional investors in Silicon Valley-based venture capital funds. The article serves as a cautionary tale by revealing the slow-motion asset bubbles that commonly occur within alternative asset classes.

The 10 Greatest US Investors and the Virtues that Made Them

CFA Enterprising Investor – March 31, 2023
This article was prompted by a question posed to ChatGPT by Andrew Mitchell of Ophir Asset Management. Andrew asked the app who were the best 10 investors in history. The article revises this list and explains the rationale for the changes. It also links each investor to 10 critical virtues shared by the best investors.

The Active Management Delusion: Respect the Wisdom of the Crowd

CFA Enterprising Investor – March 31, 2023
Explains the principle of the “wisdom of crowds” and why it makes active management of portfolios unlikely to outperform low-cost index funds. It also explains why the investment advisory profession promotes the use of excessive portfolio complexity and heavy use of active management despite the low probability of success.

The Story of Hetty Green: America’s First Value Investor and Financial Grandmaster

Financial History Magazine – Winter 2023
Explains the history of central banking in the United States beginning with the establishment of the First Bank of the United States by Alexander Hamilton in 1790. Explains how the U.S. gradually established the four key capabilities of a central bank, which include currency stability, bank regulation, lender-of-last resort powers, and monetary policy.

U.S. Public Debt:

The Debt Ceiling: A Nation Divided and Indebted Cannot Stand

CFA Enterprising Investor – January 20, 2023
Discusses the extreme danger of risking the creditworthiness of the United States in a debt ceiling standoff, but also explains the unsustainability of U.S. federal budget deficits.

Central Banking:

A History of Central Banking in the United States

The Alchemist’s Paradox, Central Bank Sovereignty, and the Fate of Crypto

CFA Enterprising Investor – November 17, 2022
Explains the formidable hurdles that cryptocurrency and decentralized banking must clear to exit the murky world of shadow banking and enter the mainstream. Although history proves that it is unwise to ever say never, it seems highly unlikely that these hurdles will be cleared.

Covid-19 & Inflation:

Strong or Volcker? The Fed and Global Financial Stability

CFA Enterprising Investor – October 21, 2022
Explains the effects of the monetary policy in the United States using the historical examples of Paul Volcker (1979-1982) and Benjamin Strong (1925-1929) as examples. The article argues that the Federal Reserve’s policies are more likely resemble those of Volcker rather than Strong.

The Inflation Game: War, Peace, and the Perils of Central Banking

CFA Enterprising Investor – September 22, 2022
Explains why monetary policies enacted during periods of high inflation are likely to trigger a recession and brief period of deflation. The article argues that the monetary response of the Federal Reserve in 2022-2023 is highly likely to trigger a recession before price stability returns.

The Fed Isn’t Bluffing: The Real Threat of an Upside-Down Depression

CFA Enterprising Investor – June 22, 2022 (originally published on February 5, 2022)
Explains why the Federal Reserve cannot afford to allow inflation to persist and why they will continue tightening policy until price stability returns. It explains the causes of the Great Inflation of 1965-1982, and why the Federal Reserve leadership will not repeat them.

A Post-Covid Recovery is Unlikely to Resemble the Roaring 20s; the Years 1919 and 1999 Serve as More Insightful Comparisons

Social Sciences Research Network – May 2, 2021
Explains the similarities between the COVID-19 financial crisis and past crises, such as the onset of World War I in July 1914, the post-World War I/Great Influenza pandemic in 1919-1920, and the Dot-com bubble in 1999. The paper argues that speculation is likely to resemble the Dot-com era, while the burst of spending is likely to resemble 1919-1920.

Speeches and Podcasts

Using Financial History to Improve Your Investment Decisions

Date: April 3, 2024
Time: TBD
Location: Portland, OR (venue TBD)

Investing is a game of repetition, yet most investors fail to see the repetitions because comparable events are often separated by many decades. The only reliable remedy is to study financial history and manually extend one’s memory of the past. This presentation, which will be hosted by the CFA Society of Portland, will discuss several critical lessons from financial history that remain just as applicable today as they were in the distant past. Examples include post-pandemic inflationary pressures, Federal Reserve monetary policy in 2024, and economic expectations in the aftermath of the COVID-19 Inflation. As soon as registration is available, a link will be provided.

University of Virginia - Investing in U.S. Financial History Forum and Book Signing

Date: March 28, 2024
Time: TBD
Location: Alumni Hall at the University of Virginia in Charlottesville, VA

I am very excited to return to the University of Virginia to host a speaking event and book signing at Alumni Hall. More details are to come on topics of discussion and the time. Stay tuned.

Museum of American Finance Virtual Forum on Investing in U.S. Financial History

Date: March 19, 2024
Time: 12:00 - 1:00 pm EDT
Location: Virtual (Details TBD)

The Museum of American Finance and Fordham University will be hosting a virtual forum in which I will be discussing several of the most important lessons from financial history and how they remain applicable today. The first 100 individuals to register will receive a free electronic copy of Investing in U.S. Financial History courtesy of the Fordham Gabelli Center for Global Security Analysis.

Register Here

Money Tree: Investing in U.S. Financial History - November 3, 2023

Kirk Chisholm and I discussed a number of important topics that can be understood in greater context by studying financial history. Issues include the Post-COVID-19 inflation in comparison to the Post-World War I/Great Influenza inflation, the unsustainability of U.S. fiscal deficits, and the most likely course of the Federal Reserve's monetary tightening campaign.